Kevin Brennan: Frankly, sometimes the Minister seems to want to chair the Committee as well as be the Minister on it so that she can decide what is relevant, what is in scope and what is not in scope. The Chair is perfectly qualified to tell us what is in scope when we discuss clauses and amendments to the Bill and I am sure that, if we were out of scope, Ms Buck would be quick enough to tell us. That is not for the Minister to decide. As I have said before, the Government have their way and the Opposition have their say and it is her minimum responsibility to make a good attempt to answer questions that are put to her about the Bill. She really should respond to such inquiries in a more appropriate fashion.
The Minister did not answer that question in the course of the debate and she has not explained fundamentally what the problem is with the Green Investment Bank being on the books. She gives the impression that it cannot be privatised without getting rid of the statutory requirement for the bank to have green purposes to its investment, but it can be. The Government could privatise the bank and hold not a single share in it, it could be completely in the private sector, with every intent and purpose except one: the technical ruling by statisticians in the Office for National Statistics —I am not sure whether boffins is the right term, so I will call them statisticians. I will not call them boffins, as long as she agrees not to call hard-working public sector and private sector workers “fat cats”. The bank could be in the private sector completely, the Government could hold no stake in the bank whatever—to all intents and purposes it would be a private sector company—but it could retain, perfectly legally, a statutory obligation to invest in green projects.

Kevin Brennan: I beg to move amendment 116, in clause35,page50,line16,after “exceed” and insert
“a maximum of no less than”
This amendment would provide that regulations may make provision to secure that the total amount of exit payments made to a person in respect of a relevant public sector exit does not exceed a maximum of no less than £95,000.
With this it will be convenient to discuss the following:
Amendment 109, in clause35,page50,line16,leave out “£95,000” and insert “£145,000”
This amendment would increase the cap to a level similar to the NHS, £145,000.
Amendment 112, in clause35,page50,line16,at end insert
“which amount shall be subject to annual re-evaluation”
This amendment would subject the amount of the cap to annual revaluation.
Amendment 114, in clause35,page50,line16,at end insert
“except for payments made to a person earning below the national average wage”
This amendment would exempt from the cap those earning below the national average age.
Amendment 115, in clause35,page50,line16,at end insert
“except for a person who has been in long-term service”
This amendment would exempt from the cap those who have provided ‘long service’
Amendment 128, in clause35,page50,line16,at end insert
“the level of the provision made under subsection (1) will be linked to inflation and earnings growth.”
This amendment would ensure that the level that the restriction on public sector exit payments is set will be linked to inflation and earnings growth.
Amendment 104, in clause35,page50,line34,leave out paragraph (c)
This amendment would exclude from the cap compensatory payments made by an employer to a pension scheme which do not go to the person leaving the service.
Amendment 121, in clause35,page50,line40,leave out subsection (g)
This amendment would remove payment in lieu of notice from the public sector redundancy exit payment cap.
Amendment 105, in clause35,page51,line7,at end insert
“including payments relating to employees earning less than £27,000 per year”
This amendment would provide that regulations may exempt from the public sector exit payment cap those earning less than £27,000.
Amendment 106, in clause35,page51,line7,at end insert
“including cases relating to employees who have been in long-term service”
This amendment would provide that regulations may exempt from the public sector exit payment cap employees who have provided ‘long service’.
Amendment 108, in clause35,page51,line7,at end insert
“including where the full council of a local authority decides to grant a waiver of the cap”
This amendment would provide that regulations may make exemptions where the full council of the local authority decide to grant a waiver of the cap.
Amendment 122, in clause35,page51,leave out lines 18 and 19 and insert—
‘(9) The amount for the time being specified in subsection (1) shall be increased by order made by the Secretary of State every year by a revaluation percentage.
(9A) The revaluation percentage to be specified in section (9) is the percentage increase in the general level of earnings in Great Britain in that year.”
This amendment would ensure that the level of the cap is maintained in real terms.
Amendment 124, in clause35,page52,line35,at end insert—
‘(2A) All prescribed public sector authorities may relax the restrictions imposed by regulations made under section 153A, if certain conditions are met.
(2B) The Secretary of State shall by regulations made by statutory instrument specify the conditions to be met under subsection (2A).”
This amendment would extend the waiver in respect of the cap to all public sector authorities.

Kevin Brennan: We have had a very exciting afternoon, as I am sure you would agree, Ms Buck. The Government have adopted what might be called the “Boris principle” on voting—namely, that they can ignore the result of the first vote if they do not like the way it came out and demand a second. We live and learn about parliamentary procedure. We obviously respect your ruling on the matter, Ms Buck, with absolute and total respect.
We now come to part 8, which interestingly has nothing to do with enterprise, despite the Bill’s title. This has been called a “Christmas tree Bill”, because it has lots of different baubles on it. If that is the case, part 8 is an Easter egg hanging on the Christmas tree, because it has absolutely nothing to do with enterprise. Nevertheless, the Government chose to include it and it was ruled to be in scope, so it is completely in order for us to discuss these matters as part of the Enterprise Bill.
Let me make it clear from the outset that the Opposition agree that excessive exit payments in the public sector should not be paid, and that abuses in that regard should certainly be ended. The problem with the Government’s approach is that they are attempting to govern by headline in a very complex area. In doing so, they are creating anomalies and unfairness, and—that  old favourite of ours—legislating to invoke the law of unintended consequences. That is what is likely to happen as a result of legislating rigidly on this matter, as they are doing.
Governments often resist legislating rigidly in Bills because they understand the mess that can ensue. It was Otto von Bismarck—not Leo from “The West Wing”—who first said that people should not see how two things are made: laws and sausages. This is a very good example of that. Putting such things in the Bill is basically a Government headline for the tabloid press about public sector fat cats—an odious remark that the Secretary of State made on Second Reading, which was an insult to many thousands of decent, hard-working people in this country. By legislating in that way, all sorts of messy, sausage-like substances will seep out.
The first group of amendments to clause 35 are about where an exit cap should be placed, who should be covered and who should be exempt. They are largely probing amendments, but I may press one of them later to test the Committee’s opinion on it, because it refers to what the Government said their intention was in introducing this legislation on exit payments. The amendments also cover an annual revaluation to ensure that the value does not diminish and that more workers are not caught inside the exit cap net.
Let me go through the amendments in turn. Amendment 116 would provide that regulations may make provision to secure that the total amount of exit payments made to a person in respect of a relevant public sector exit does not exceed a maximum of no less than £95,000. In other words, it seeks to ensure that the cap cannot be lowered further without legislation. I would be interested to hear from the Minister what the Government’s intension is on the question of whether it can be lowered without further legislation.
Amendment 109 probes why the cap has not been set at a level similar to the NHS level, which was £145,000. Although it is a probing amendment, I am interested to know why the provision introduces a disparity between different sets of public sector workers. The NHS caps underwent proper research, consultation and subsequent scrutiny, and were seen to be fair. I am afraid that that compares very badly with a completely rushed consultation with minimal research and the resultant limited scrutiny that these Government proposals have had.
In the other place, Baroness Neville-Rolfe said:
“A cap even at the level proposed by the Government will not affect the large majority of public sector workers”—[Official Report, House of Lords, 4 November 2015; Vol. 765, c. GC366.]
Will the Minister supply the Committee with the figures for the workers who would be affected by an exit cap payment of £95,000? The words, “a large majority” are a bit woolly; we need a bit more precision than that when we are legislating. What are the exact projections for the cap of £95,000 and what would the exact projections be if the cap were introduced at £145,000? I do not intend to press the amendment to a vote—it is a probing amendment—but we want to understand who is being affected and what we are talking about. Perhaps the Minister would supply the Committee with the cost to the public purse of the cap set at those two limits. I hope  that she is able to do so. If she is not accepting on the grounds of costs, she will obviously have those figures to hand.

Catherine McKinnell: It is a pleasure to serve under your chairmanship, Ms Buck. My hon. Friend the Member for Cardiff West, the shadow Minister, made a powerful speech to which I hope the Minister has listened. I hope we will hear about changes to the current proposals, and I hope that our logical amendments to what seems to be an irrational approach to dealing with a problem of the Government’s own making will be accepted. Ideologically driven cuts to the public sector have proved far more costly than the Government initially anticipated. We only have to look at the payments made as part of the top-down reorganisation of the NHS, which is estimated to have cost £1.6 billion in six-figure pay-offs alone to 1,000 highly paid officials. That goes some way to explaining the Government’s keenness to claw back some of those payments, or certainly to ensure that that does not happen in future. They appear to be trying to slam the gate shut after the horse has bolted.
Nobody questions the logic of what the Government are trying to achieve in trying to prevent significant pay-offs. However, it seems to be a sledgehammer to crack a nut approach. In my former role as shadow Attorney General, I came across examples in parliamentary questions to the Department that tried to uncover similar practices in the Law Officers Department. The Crown Prosecution Service had spent £83 million since 2010-11 on redundancy packages, and 24% of that went to just 153 individuals who received redundancy payments in excess of £100,000 each.
No one is questioning the principle behind what the Government are trying to achieve. They have clearly said that the measure is aimed at the highest paid officials, but in reality it will hit the redundancy packages of ordinary civil servants on modest wages—even some on wages below the national average—who have given long years in public service. It would, for example, hit a worker on just £24,611 who had worked for 34 years and was over 50.
When their lordships considered the proposal in Grand Committee, my noble Friend in the other place, Baroness Hayter, asked:
“Is this just a rather nasty, crafty little device that they have alighted on simply to help to reduce the deficit, given that the Chancellor seems to be having difficulty with it, by hanging that deficit around the neck of their own employees? Or is this just mistaken drafting, which the Minister will be happy to amend on Report?”—[Official Report, House of Lords, 4 November 2015; Vol. 765, c. GC359-60.]
Unfortunately, the answer given seemed to indicate that it was not a mistake, that it is the Government’s intention and that they do not intend to amend the measure. I very much hope that the Minister tells us something else today. It would be good to hear from her that the Government have taken on board some of the concerns about the impact of the measure. I hope that they will accept the amendments we have tabled or give some indication that they will amend the clause themselves, as they seem happy to do with other clauses. That does seem to have caused confusion with voting in Committee.
I have received a number of representations from extremely worried constituents. Large number of civil servants work in Newcastle, and they are concerned about the impact that the clause will have on very  average earners, some of whom are on less than £25,000. Thousands of civil servants work for Her Majesty’s Revenue and Customs and Department for Work and Pensions in Longbenton in Newcastle, and I have been contacted by a huge number who say that they are concerned about the unfairness in how the cap is being implemented. They want to see it brought more in line with the promises made by the Government before the general election.
The cap should impact on only those highly paid workers who the Government said they were seeking to target, and not on those on modest salaries. Does the Minister recognise those concerns, which are being raised by Members of this House and members of the public? Does she agree that the proposals in clause 35 will inadvertently hit long-serving civil servants on very modest salaries? Or does she consider them all to be fat cats, as they seem to have been characterised in previous comments?
My constituents have also pointed out that their terms and conditions and exit packages were already significantly altered by legislation passed in the previous Parliament. When the changes were introduced by the civil service compensation scheme in 2010, the former Cabinet Office Minister, now Lord Maude, described them as fair for the taxpayer and right for the long term. Given that we are looking at the matter again today, it would be useful if the Government recognised that their approach is deeply disconcerting and in many ways discourteous to public sector workers, who ultimately feel that their contract with the Government is being broken in a manner that is not well considered or thought through.
Alternatively, if the approach is well considered and thought through, it certainly appears to be an abuse of power by the Government. The Minister has placed great emphasis on provisions that allow for special exemptions from the cap, but she has not provided sufficient information as to how and where those exemptions will apply, and that concern is very much shared by employees in the private sector and in the public sector, who will be impacted by the changes. Will she give some consideration to the concerns that have been raised not only by the shadow Minister, very eloquently, but by the hon. Member for Livingston and by constituents and public sector workers up and down the country who want a fairer approach from the Government?

Anna Soubry: I am grateful to my hon. Friend. Another question that has been asked is why so much will be in secondary legislation. One reason why we are doing that is that it is genuinely a much better way to introduce something that will undoubtedly—I am not going to pretend otherwise—have its complications and nuances. It is important that we do not just introduce blanket rules, but have provisions to look at any cases that might or should be exempted.
Somebody asked a question—forgive me for not remembering who, but I think it might have been the hon. Member for Wakefield in an intervention—about the national health service, which, as she identified, has a cap of £160,000. This legislation will affect the existing cap, taking it down to £95,000.
I want to make some progress and deal with the amendments. Amendment 109 seeks to raise the cap to £145,000. I would argue that it is unclear whether the Opposition favour completely uncapped exit payments or a cap set at what could be over 10 times the maximum statutory redundancy. The Government have made it clear, however, that we want to put the figure at £95,000. We were very clear about that in our manifesto.
Amendment 105 seeks to impose a £27,000 earnings floor for the cap, but the cap will have no impact at all on the large majority of public sector workers. As I have said, it will affect only the top 5%. We are really struggling to find an example of any civil servant earning below £25,000, for example, who would be in any way affected by the cap. Those earning below £27,000 will not be caught and, in any event, we believe that this represents a generous package that many will be entitled to.
Amendments 106 and 115 would exclude those in long-term service. There may be some instances where individuals with very long-term service on more modest salaries could be affected by the cap, but as I have explained, the £95,000 represents a generous package compared with what is available to those on similar pay in the private sector. The majority of long-serving employees caught will be those with high or very high salaries.
Amendments 112, 116, 122 and 128 relate to annual revaluation. Amendments 112, 122 and 128 all seek to subject the cap to annual revaluation, while amendment 116 seeks to impose a minimum level of £95,000 for the cap. All those amendments fail to offer the flexibility that the clause provides for. The clause allows the Government to amend the level of the cap to take into account all prevailing circumstances, with the additional scrutiny of the affirmative procedure. Any form of fixed-term revaluation would just create an artificial and arbitrary  mechanism. As any amendments to the cap require an affirmative procedure, the current mechanisms for changing the cap offer both flexibility and full parliamentary scrutiny.
Amendments 104 and 121 would exclude pension top-ups and payment in lieu of notice. We are not discussing retirement in the normal manner; we are discussing the additional top-ups linked to redundancy, funded by employers. As I mentioned previously, any earned pension that has been accrued by an individual is outside the cap. Again, it is really important that everybody appreciates that any sums of money paid by an employee into a pension pot of any description—anything accrued by them through their own money—is outside the cap. These top-ups linked to redundancy can greatly increase the value of pension payments above the level that has been earned through years of service. They often represent a substantial amount of an individual’s exit payments.
Payments in lieu of notice are also part of an exit payment and can be substantial for high earners—again, the emphasis really is on high earners—as some recent high-profile exits have shown. Excluding such payments would not just be unfair, but provide an obvious loophole to avoid the effect of the cap.
Amendments 108 and 124 relate to extending the waiver to local authorities and public authorities. Although we note and agree with the intentions of amendment 108 to give the full council of a local authority waiver power, I would argue that the amendment is unnecessary. Our indicative regulations, published on 3 November 2015, demonstrate that it is already our policy to give the full council of a local authority waiver power, and that will be articulated in the final regulations.
Amendment 124 seeks to grant all public sector authorities waiver powers. However, the potential inappropriate use of settlement agreements and exit payments more widely is precisely why the clause requires approval by a Minister of the Crown— rather than the employer—to relax the cap. Ministerial or full council approval means that the power will be exercised objectively with full accountability and will prevent circumvention and misuse.
For all those reasons, I very much hope that Committee members will take the view that the amendments add nothing and are not necessary, and that the Government have done the right thing by introducing the cap at £95,000. The reality is that in any event very few, if any, lower-paid workers will be affected if they are made redundant. It has to be said again that, compared with what is available in the private sector, an exit payment of £95,000 for someone who has been on low pay must be seen as generous.

Kevin Brennan: That is certainly not what we are saying with the amendments, which are designed to ensure that the Government’s avowed intentions and the sentiments with which they were expressed are actually fulfilled. Without going over all the detail in this lengthy groups of amendments—the Minister made an effort to respond in some detail, for which I thank her—it is important that we test the Committee’s view on the Government’s previous position.
Last year, the then Treasury Minister, the right hon. Member for Witham (Priti Patel), said:
“This commitment, which will be included in our 2015 General Election manifesto, will cap payments for well-paid public sector workers at £95,000. Crucially, those earning less than £27,000 will be exempted to protect the very small number of low earning, long-serving public servants.”
That is exactly what amendment 105 would do. It would fulfil the commitment that that Minister made to the British people at that time, which was the basis on which people understood the Government were intending to act to ensure that those earning less than £27,000 would not be affected. On that basis, I ask my hon. Friends and others to support me in voting for amendment 105, but I beg to ask leave to withdraw amendment 116.

Kevin Brennan: I beg to move amendment 110, in clause35,page50,line16,at end insert
“except in the case of conciliation settlements”
This amendment would exclude settlements made at an early conciliation stage from the public sector exit payment cap.
With this it will be convenient to discuss the following:
Amendment 111, in clause35,page50,line16,at end insert
“except in the case of exit payments for potential claims under Part IVA of the Employment Rights Act 1996 (protected disclosures)”
This amendment would create an exemption from the cap for whistle-blowers.
Amendment 127, in clause35,page50,line16,at end insert
“except for those payments made in COT3 pre-conciliation settlements.”
This amendment would ensure that Early Conciliation settlement via ACAS, cases when organisations use payments as an alternative to legal claims, which employers are legally obliged to attempt, would be excluded from the restrictions on public sector exit payments.
Amendment 118, in clause35,page50,line16,at end insert—
‘(1A) Regulations under subsection (1) may not apply to exit payments paid under terms of settlement agreed between the parties in respect of litigation concerning claims of unlawful discrimination, harassment or victimisation (or both) brought under the Equality Act 2010, or exit payments that comply with an award order (or both) of a court or tribunal in relation to such claims.”
This amendment would exclude discrimination cases from the cap on public sector exit payments.
Amendment 125, in clause35,page53,line24,at end insert—
“153D Reporting and referral mechanisms to be included in regulations under section 153A
(1) The Secretary of State shall by regulation make provision in relation to restrictions imposed by section 153A where the exit payment relates to a potential claim under Part IVA of the Employment Rights Act 1996 (protected disclosures).
(2) Regulations under subsection (1) shall—
(a) provide for the creation of a regulatory referral system, to apply where an exit payment relates to a potential claim under Part IVA of the Employment Rights Act 1996, in circumstances where—
(i) the Minister of the Crown as described in section 153C considers it appropriate; and
(ii) there has been suspected or likely wrongdoing, malpractice, health and safety risk, breach of law or regulation; and
(b) provide that any individual who is subject to an exit payment as described in subsection (1) shall have access to legal advice on section 43J of the Employment Rights Act 1996 (contractual duties of confidentiality).
‘(1) The Secretary of State or the Treasury shall periodically produce guidance on exit payments made in accordance with section 153D(1) for relevant public sector employees as described in section 153A(2).”
This amendment would provide further protections for employees who have made protected disclosures when being considered for exits.

Kevin Brennan: I beg to move amendment 113, in clause35,page50,line16,at end insert
“except where exit payments are made under existing public service agreements”
This amendment would exempt exit payments made under existing public service agreements.
With this it will be convenient to discuss the following:
Amendment 119, in clause35,page50,line16,at end insert—
‘(1B) An exit is not a relevant public sector exit if, prior to regulations, the terms of an exit taking place after the regulations issued under subsection (1) coming into effect are subject to a contractual agreement made prior to those regulations coming into effect between—
(a) an employee of a prescribed public sector authority and their employer, or;
(b) a holder of a prescribed public sector office and the relevant prescribed public sector authority.”
This amendment would exclude from the public sector exit cap certain exit agreements that have already been entered between the employer and employee, prior to the implementation date of the cap.
Amendment 120, in clause35,page50,line16,at end insert—
‘(1C) Regulations made under this section may not take effect before 1 April 2018.”
This amendment would ensure that redundancy schemes underway before regulations implementing the cap take effect are not interfered with retrospectively.
Amendment 107, in clause35,page51,line7,at end insert
“including any period of institutional reorganisation being implemented within two years of the passing of this Act”
This amendment would provide that regulations may make exemptions from public sector exit payment cap for any period of institutional reorganisation being implemented within two years of this Act.